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Inflation, Bond Yields and Stocks

There has been alot of concern in the markets and the media over the last few weeks, especially last week, about rising inflation, rising bond yields and the effect on stocks overall. In the post below, I will outline a few points:

1. Inflation is already in the system, (please see the Commodity/Asset prices chart below) and is not necessarily a negative for stocks at all. As with most market cycles, there will be sector and stock winners & losers. We will cover the expected winners below.

OUR TOP 20 INFLATION IDEAS: https://bluechipdaily.com/our-best-inflation-ideas-may-2021/

2.Prior to this current cycle, there have been two instances over the last 10 years where 10-year UST yields (TNX) have doubled,
(please see the TNX Monthly chart below).

2012-2013  1.394 to 2.984
2016 1.336 to 2.621 & 2016 – 2018 1.336 to 3.248

3. In both instances, stocks as measured by the S&P 500 (SPX) moved higher both times, (please see the SPX Monthly Chart below).

TNX vs SPX Levels 2012-2013
July 2012:      TNX 1.394 SPX 1340
March 2013: TNX 2.086  SPX 1570
Sep. 2013:     TNX 2.984  SPX 1720

TNX VS SPX Levels 2016 – 2018
July 2016: TNX 1.336  SPX 2200
Nov. 2016: TNX 2.621  SPX 2083
Sep. 2018: TNX 3.248  SPX 2940

4. It is very important to understand that none of this data is a prediction, or inference of any future performance. What happened in the past will not necessarily repeat in the future. It does show however, that bond yields have risen sharply in the recent past and stocks have moved higher as well.

TNX MONTHLY


SPX MONTHLY


COMMODITY/ASSET PRICES, LAST 12 MONTHS

3. Inflation is brought on by a strong economy and strong consumer demand. Inflation, when not rampant, is a much better scenario then deflation.
I have selected 20 top inflation ideas (15 stocks & 5 ETFs that I expect to outperform if we get a follow through in inflation and a rise in bond yields.

JOIN HERE TO GET ACCESS TO THE MEMBERS BLOG: https://bluechipdaily.com/join-blue-chip-daily/
MEMBERS BLOG: https://bluechipdaily.com/our-best-inflation-ideas-may-2021/

BLUE CHIP DAILY MAJOR MARKET CALLS

1. February 2020, we started to sell stocks when SPX broke 3200, and avoided most of the 2020 Bear Market:
https://bluechipdaily.com/we-went-risk-off-when-spx-broke-3200-heres-why/

2. March 2020, we started to buy stocks 5 days off the low.
https://bluechipdaily.com/we-started-buying-stocks-on-march-18-heres-why-blog/
https://bluechipdaily.com/its-a-market-of-stocks-196-s7p-stocks-that-bottomed-in-q4-2008/
https://bluechipdaily.com/our-recent-views-on-the-market-recovery-the-fed-and-how-we-traded-it/

3. May 2020 we were early to recognize the Cyclical/Value Rotation, and have been early into that move as have many Blue Chip Daily Subscribers.
https://bluechipdaily.com/cyclical-recovery-post/

4. We believe that this Inflation Focus Group could pay off handsomely as well.

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